- 6 - mid-1990s, a common form of business reorganization utilized by corporations to eliminate or to reduce substantially the 4.5- percent Texas corporate franchise tax on business income. See Tex. Tax Code Ann. sec. 171.001(a)(1), (b)(3) (West 2002) (imposing the Texas franchise tax on various business entities, but not on partnerships). The six specific steps in ADCS’ reorganization, all occurring between January 18 and January 22, 1996, are reflected below: 1. ADCS-Limited was formed as a Texas limited partnership; 2. Advanced Delivery & Chemical Systems Holdings LLC (Holdings LLC), was formed as a Delaware limited liability company to be taxed as a partnership. ADCS owned a 99-percent membership interest in Holdings LLC. The individual shareholders of ADCS owned the remaining 1-percent membership interest in Holdings LLC; 3. Advanced Delivery & Chemical Systems Operating, LLC (Operating LLC) was formed as a Delaware limited liability company to be taxed as a partnership. ADCS owned a 99-percent membership interest in Operating LLC; 4. Advanced Delivery & Chemical Systems Manager, Inc. (ADCS-Manager) was formed as a Delaware corporation owned 100 percent by the individual shareholders of ADCS. ADCS-Manager owned the remaining 1-percent membership interest in Operating LLC; 5. After the above entities were formed, 99 percent of the operating assets of ADCS were transferred to Holdings LLC, and the remaining 1 percent of the operating assets of ADCS were transferred to Operating LLC, except that (as stipulated by thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011